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United States ship operators engaged in the protected trades should be given every reasonable encouragement. To this end the Navy advocates favorable terms of sale to citizens and, where applicable, adequate operating subsidies.

Future international agreements, technological changes, and the volume of trade that United States shipping will carry after the war make it difficult at this time to project accurately the number of ships which should be retained in each of the above classes. The Navy Department, however, considers that these matters should be under constant and continuous review. To this end, the Navy Department would welcome the opportunity to designate certain officers to assist the United States Maritime Commission in developing a flexible maritime policy which will parallel the development and support the Nation's military policy.

Legislatively, it is not a new principle that the Navy Department be charged with the national-defense aspects of the merchant marine. For example, at present a subsection of the Merchant Marine Act of 1936 (title 46, sec. 1151B, U. S. C. A.) requires the Maritime Commission to submit to the Navy Department for approval the plans and specifications of all vessels for which a construction subsidy is sought, in order to insure that economical and speedy conversion to naval or military auxiliaries is feasible in time of war or national emergency. It is even more important that it have the necessary authority to make the final determination regarding the disposal of ships to noncitizens and the retention of ships in a national-defense frozen reserve. should be a clearly defined authority delegated by the Congress specifically to the Navy Department and should not merely place this Department in an advisory capacity as is tentatively provided in the April 19 print of the proposed bill.

This

Accordingly, I urge that section 4 and section 9 of H. R. 1425 be amended to make the determination of the Secretary of the Navy as to these matters binding and final upon the Maritime Commission. The Navy Department has not been advised by the Bureau of the Budget of the relation of this report on the bill or of the amendments herein proposed to the program of the President.

Sincerely yours,

H. STRUVE HENSEL, Acting Secretary of the Navy.

[No. 44]

FURTHER REPORT OF WAR DEPARTMENT ON THE SHIP-DISPOSAL

BILL (H. R. 1425)

Hon. SCHUYLER OTIS BLAND,

WAR DEPARTMENT,

Washington, D. C., June 21, 1945.

Chairman, Committee on the Merchant Marine and Fisheries,

House of Representatives.

DEAR MR. BLAND: On March 6, 1945, I wrote you expressing War Department opposition to the enactment as then written of H. R. 1425, Seventy-ninth Congress, a bill to provide for the sale of certain Government-owned merchant vessels and for other purposes, and suggested certain amendments for the consideration of your committee.

The first of three amendments recommended in that letter was that the last sentence of section 1 (a) of the bill be amended to read as follows: [New matter in italics.]

* * * No vessel otherwise subject to this Act, of which any other department or agency of the United States Government has the right to control, custody, or possession, shall be sold or chartered under this Act until such vessel is determined by such department or agency to be surplus to its needs or is returned or transferred to the Commission; nor shall any such ressel with respect to which such a determination, return or transfer has been made, or any other vessel otherwise subject to this Act be sold or chartered under this Act until such vessel has been determined by the War Department also to be surplus to its needs.

Upon further analysis it appears that the proposed amendment to section 1 (a) may not accurately reflect the position of the War Department in that literally it would permit the War Department without limit to withhold from American-flag operators the efficient high-speed vessels which they need to compete effectively with the merchant marine of other nations. Nothing is further from our intentions. As stated in my letter of September 12, 1944, to Mr. Woodrum, chairman of the Select Committee on Post-war Military Policy of the House of Representatives, which is printed at pages 444, 445 of part I of hearings before your committee on H. R. 1425, the War Department has the keenest interest in the maintenance of a powerful American merchant marine as an essential requirement of a completely integrated national defense.

To this end, the War Department believes it desirable that American-flag operators be given first choice ahead of it in the selection of vessels from the emergency fleet, so as to enable them most effectively to hold their position against foreign competition. On the other hand, it seems quite apparent that the War Department should be author

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ized to select the vessels which it requires for its own use in accordance with the principles enunciated in the previously mentioned letter to Mr. Woodrum, before any vessel is made available for sale to a foreign national.

To reflect these principles in the committee print of H. R. 1425 dated April 19, 1945, I should like to withdraw the recommended amendment to section 1 (a) of the bill which is quoted above and substitute a new section 4 as follows after section 3 of the bill, renumbering all subsequent sections accordingly: [New matter in italics.]

TRANSFER OF VESSELS TO THE WAR DEPARTMENT

SEC. 4. (a) Subject to the provisions of subsection (b) of this section, the Commission shall transfer to the War Department such vessels to which section 1 applies as may be nominated by the Secretary of War which have not been previously sold to, or are not then under charter to, citizens of the United States pursuant to the provisions of section 3 hereof.

(b) Nominations under this section may be made at any time, but in the case of any vessel other than a Liberty-type vessel, transfer to the War Department will be made under this section only if such vessel shall not have been sold or chartered to a citizen of the United States under section 3 hereof within such reasonable period as the Commission may fix not in excess of ninety days after the receipt by the Commission of the Secretary of War's nomination of such vessel. To make the present section 4 of the bill conform to the new section 4 and at the same time to reflect the amendment of this section recommended in my letter of March 6, 1945, it should be renumbered as section 5 and subsection (a) reworded as follows (deleted matter in black brackets, new matter in italic):

SALES OF VESSELS NOT NEEDED FOR UNITED STATES COMMERCE

OR DEFENSE

[SEC. 4.] SEC. 5. (a) Any vessel to which section 1 applies which has not been sold or chartered under section 3 hereof to a citizen of the United States or nominated for transfer to the War Department under section 4 hereof and which the Commission finds to be not necessary for the domestic or foreign commerce of the United States and after consultation with the Secretary of War and the Secretary of the Navy to be not necessary for the national defense, may in the discretion of the Commission, after consultation with the Secretary of State, be sold to a person not a citizen of the United States subject to the provisions of subsections (b), (c), and (d) of this section. No vessel to which section 1 applies shall, however, be sold or otherwise made available to any foreign government or to any citizen thereof or to any person for transfer to registry under the laws of such foreign government if the Commission finds that such sale, availability, or transfer will, when taken together with vessels constructed, under construction, or otherwise being acquired for such ownership or registry, result in a greater total oceangoing tonnage under such ownership or registry than was so owned or registered on September 3, 1939.

Present section 9 of the bill, which would become section 10 upon the adoption of the above recommendations, should be reworded in the manner suggested in my letter of March 6, 1945, to require consultation by the Commission with the Secretary of War as well as with the Secretary of the Navy in the determination of the national defense reserve.

It is felt that all of the amendments proposed are of vital importance to the national defense and should therefore receive the favorable consideration of your committee.

The War Department is unable to estimate the fiscal effects of the bill if enacted.

The War Department has not been advised by the Bureau of the Budget as to the relationship of the legislation or of this report thereon to the program of the President.

Sincerely yours,

HENRY L. STIMSON, Secretary of War.

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